Senate Co-Sponsorship Memoranda

MEMORANDUM

In the near future, I plan on introducing a package of 5 bills looking to improve the financial stability of the City of Philadelphia.

The City is seeking this legislation so it will have additional enforcement tolls to collect delinquent taxes. The City is owed $249 million in property taxes, $91.5 million in business income and receipt taxes and $47 million in wage taxes.

This legislation is an integral part of a larger tax collection strategy and would enable a significant increase in collections. It would also let those who don’t pay their taxes know that the City has the necessary and appropriate powers to collect what it is owed. If the City does not obtain this authority, delinquent taxpayers will question whether there are real consequences to not paying their taxes.

Document #1

The first bill would amend the Municipal Claim and Tax Lien Law (MCTLL) Amendments to Allow Liens for Tax and Other Municipal Claims On Any Property, Anywhere in Pennsylvania

Presently, the MCTLL permits municipalities to impose liens for real estate taxes on the property that is taxed without going to court. Similarly, it permits liens for work, services, improvements, and the like performed by the municipality to be imposed on the benefited property (for instance, the MCTLL permits the City to lien a property for delinquent water/sewer bills, or after abating a nuisance on the property). It permits municipalities to impose attorney fees and collection agency fees on such delinquencies if their legislative bodies so provide.

The proposed amendment to the MCTLL would do these basic things:

1. It would permit a municipality to impose a tax lien on all property, real and personal, anywhere in the state, for an expanded array of municipal claims including business taxes and other charges unrelated to real property. Outside the taxing municipality, such a lien would have to be filed to exist at all, and would have the same priority as a personal judgment, so as not to unduly interfere with the real estate market.

2. It would allow charges, expenses, and fees associated with collecting the tax liability to be included in the lien, and would also allow the inclusion of such amounts generated in connection with collections under the Self-Assessed Tax Lien Act. This would permit municipalities to pass the cost of attorneys and collection agencies on to delinquents rather than to the tax base generally. While the City can already add costs of collection to delinquent property taxes, it cannot do so for other taxes, such as the business tax. The proposal would fix this problem (the state Department of Revenue currently has this power with respect to state tax collections).

3. The proposed MCTLL amendments would also permit the City to impose liens for unpaid fines.

Document #2

The second bill would create a Confidentiality of Taxpayer Information for the City of Philadelphia.

Under present law, much of the tax information gained by the City is protected by a local regulation, but there is some risk that a court would find that the City’s regulation must give way to the Right to Know Law. The City is the only Pennsylvania municipality whose taxpayers’ information is subject to this risk. The proposed provision would expressly authorize the City to keep all taxpayer information confidential in the same manner that every other Pennsylvania locality currently can, notwithstanding the Right to Know Law.

Document #3

Presently, municipalities cannot attach bank accounts to collect unpaid taxes unless they have gone to court and reduced the tax liability to a judgment. This proposed bill, modeled on draft legislation that the state revenue department was considering, would permit municipalities to administratively (that is, without going to court) attach the bank account of a tax debtor. It sets forth the procedure for attaching the account, notifying the tax debtor, and seizing the attached funds. It also sets out a process for the debtor to challenge the attachment.

Document #4

The fourth proposal would initiate a wage Garnishment initiative in Philadelphia for delinquent taxpayers.

Presently, Philadelphia does not have the power to garnish the wages of a delinquent taxpayer, although other Pennsylvania municipalities have this authority under the Local Tax Enabling Act (which does not apply to Philadelphia). This proposed bill would give the City the power to garnish wages at the rate of 10%, which is the same authority other municipalities have under the LTEA.

Document #5

There is currently no statewide mechanism in place that allows municipalities to find out what Pennsylvania banks hold funds on behalf of a tax delinquent. This proposed bill would give municipalities access to the child support enforcement system used to query banks about whether an individual has funds at a particular bank for purposes of locating the funds of a tax delinquent. The state Department of Revenue would act as a clearinghouse for requests from municipalities.

If you have any questions or wish to sign on to this legislation, please contact my Harrisburg office at 717-787-9608

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